JELD-WEN Holding, Inc. (JELD) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals significant challenges: declining volumes, aggressive competitor pricing, and reduced EBITDA expectations. Although there are transformation initiatives and cost-saving measures, the market conditions remain weak, and guidance indicates ongoing struggles. The potential business sale is uncertain, and management's vague responses further amplify concerns. Given the market cap of $1.12 billion, the stock is likely to experience a negative reaction, falling between -2% to -8% over the next two weeks.
Key Financial Performance
Revenue Revenue for the quarter was $809 million, with core revenue down 10% year-over-year. This decline was driven mainly by lower volumes in both North America and Europe as market softness more than offset the benefits from our cost reduction initiatives and productivity efforts.
Adjusted EBITDA Adjusted EBITDA came in at $44 million or 5.5% of sales, down $38 million from the prior year. The lower margin primarily reflected continued price/cost pressure, unfavorable volume, and staffing levels set in anticipation of market share gains that did not materialize.
Net Debt Leverage Net debt leverage increased to 7.4x, driven by lower year-over-year EBITDA rather than new borrowing.
North America Revenue Revenue declined 19% year-over-year, with volume and mix down 13%. The decline was driven primarily by weaker market demand and the court-ordered divestiture of the Towanda operation.
North America Adjusted EBITDA Adjusted EBITDA for North America was $38 million compared with $75 million in the same quarter last year. The decrease was largely the result of lower volumes, operational inefficiencies, and price cost challenges.
Europe Revenue Revenue increased 2% year-over-year, with volume and mix down 6%. Mix was slightly positive, but overall demand remained soft across several key markets.
Europe Adjusted EBITDA Adjusted EBITDA for Europe was $16 million, roughly flat compared to last year as productivity improvements and cost actions offset the impact of lower volumes.
Tariff Impact The annualized impact of tariffs on the business is estimated to be around $45 million, with $17 million expected to materialize in 2025. Resistance from larger accounts has slightly tempered the overall recovery rate.
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Operating Highlights
Market demand: Both new construction and repair and remodel activity weakened further in North America and Europe. Canadian housing starts dropped by over 40% year-over-year.
Market outlook: Full-year demand for windows and doors in North America is expected to decline in the high single digits, while European demand for doors is projected to decline mid-single digits.
Cost reduction: Implemented an 11% reduction in North America and corporate headcount to address cost base.
Operational challenges: Operational inefficiencies and reduced manufacturing throughput impacted performance, limiting market share gains.
Transformation initiatives: Ongoing cost reduction and transformation programs contributed $150 million in savings.
European business review: Initiated a strategic review of European operations to strengthen the balance sheet and address elevated leverage.
Portfolio simplification: Simplifying product portfolio to focus on core product families and reduce complexity.
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Risk or Challenges
Market Demand Weakness: The company is experiencing a significant decline in market demand for both new construction and repair and remodel activities, particularly in North America and Europe. This has led to lower volumes and revenue, impacting financial performance.
Operational Challenges: Operational inefficiencies and challenges have limited the company's ability to capture market share and meet customer expectations, further exacerbating financial and strategic difficulties.
Inflationary Pressures: Persistent inflation in labor, materials, and freight costs has created price-cost headwinds, compressing margins and profitability. The company is also facing resistance to price increases and tariff surcharges from customers.
European Business Uncertainty: The company has initiated a strategic review of its European operations, which introduces uncertainty and potential disruption. This review is aimed at addressing elevated leverage and strengthening the balance sheet.
Leverage and Liquidity Concerns: Net debt leverage has increased to 7.4x due to lower EBITDA, raising concerns about financial stability. Although liquidity remains strong, the company is actively seeking ways to reduce leverage, including asset sales and restructuring.
Tariff and Pricing Pressures: The company faces ongoing challenges from tariffs, with an estimated annualized impact of $45 million. Resistance from larger customers to tariff surcharges and competitive pricing pressures are further straining margins.
Product Complexity and Portfolio Issues: The breadth of the product portfolio has added operational complexity, impacting efficiency and service levels. Simplification efforts are underway but may take time to yield results.
Canadian Market Slowdown: The Canadian market has seen a sharp decline in housing starts, down more than 40% year-over-year, contributing to overall market weakness.
Strategic Execution Risks: The company is undergoing significant restructuring and transformation initiatives, including workforce reductions and portfolio simplification. These actions carry execution risks and may disrupt operations in the short term.
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Guidance & Outlook
Market Outlook: The company anticipates full-year demand for windows and doors in North America to decline in the high single digits, a revision from the previous low to mid-single-digit decline forecast. In Europe, demand for doors is expected to decline mid-single digits, compared to the previously forecasted low single-digit decline. Demand is concentrated at the lower end of the market due to affordability concerns.
Revenue Guidance: The company has lowered its 2025 sales outlook to $3.1 billion to $3.2 billion, down from the previous range of $3.2 billion to $3.4 billion. Core revenue is expected to decline 10% to 13%, compared to the prior expectation of a 4% to 9% decline.
Adjusted EBITDA Guidance: The company now expects adjusted EBITDA for 2025 to be between $105 million and $120 million, a reduction from the prior range of $170 million to $200 million.
Capital Expenditures: Capital expenditures for 2025 are expected to be approximately $125 million, down from the prior forecast of $150 million. For 2026, capital expenditures are expected to be lower than 2025 levels, aligning with current demand outlook.
Operational Adjustments: The company is implementing a headcount reduction of approximately 11% in North America and corporate operations by the end of 2025 to align with reduced market demand. It is also simplifying its product portfolio to improve service levels and operating efficiency.
Strategic Review: A strategic review of the European business has been initiated to explore potential alternatives for strengthening the balance sheet and addressing elevated leverage. The company is also evaluating smaller non-core assets and sale-leaseback transactions.
Leverage and Liquidity: The company is actively addressing elevated leverage, with a net debt leverage ratio of 7.4x. Liquidity remains strong, with approximately $500 million in total liquidity, including $100 million in cash and $400 million in revolver availability. No debt maturities are due until December 2027.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you provide more details on the share losses mentioned in the prepared remarks and the path forward?
A:The share losses stem from a significant loss last year with a Midwest retailer on the windows side, which laps in September. Pricing remains challenging in North America, with aggressive pricing actions from competitors, particularly on the door side. Regional share loss has occurred but is not material. Simplification of the portfolio is underway, with a target to reduce 30% of SKUs, currently 50% complete. The weak market and aggressive pricing have contributed to share loss. Management expects soft volumes to continue into Q4 and year-end.
Q:What is the update on productivity and cost-saving efforts and their carryover benefit into 2026?
A:Management expects $150 million to offset headwinds, with $100 million from transformation savings, half of which will roll forward. Significant headcount reductions in Q4 are expected to yield $50 million in full-year impact by 2026. Transformation initiatives, including plant closures and automation, are already delivering results, but negative price-cost volume offsets these gains.
Q:What is driving the $55 million of productivity, SG&A, and other savings in Q4?
A:The savings are fully baked, with headwind mitigation and transformation actions already in the P&L. Negative base productivity stems from staffing up for incremental share gains that did not materialize, leading to additional costs. The $150 million in actions includes $100 million from transformation and offsets negative base productivity, resulting in a net of $100 million.
Q:What caused the 39% reduction in EBITDA expectations since August?
A:The reduction is due to softer-than-expected Q3 market conditions, lower take rates on product line initiatives, and selective service issues. Management is rightsizing the cost structure, simplifying the portfolio, and improving the operating model. The organization missed the market downturn and overstaffed for anticipated growth, which did not materialize.
Q:How much of the full-year EBITDA guidance is coming from Europe?
A:Approximately half of the consolidated total EBITDA is coming from Europe, with improvement in Europe offsetting a decline in North America year-on-year.
Q:What is the impact of a potential business sale on deleveraging and liquidity?
A:Management did not provide specific expectations but stated that any capital generated from a strategic review would be used to deleverage and strengthen the balance sheet. There are no liquidity issues, and the company has ample liquidity with a revolver in place.
Q:What is driving the severe decline in Q4 EBITDA expectations sequentially?
A:The decline is due to seasonality, volume mix being down year-on-year, and price/cost negativity being almost double Q3 levels. Cost inflation is in line with expectations, but pricing realization is lower. Base productivity is impacted by the need to rightsize the North America structure for lower demand.
Q:What are the near-term liquidity plans, including the use of the revolver and sale-leaseback actions?
A:The company has not drawn on the revolver and does not plan to in Q4. Select sale-leasebacks are being executed to provide additional liquidity. Management is targeting free cash flow neutrality in Q4 by reducing CapEx and managing working capital rigorously.
Q:Is the share gain opportunity expected to materialize in 2026?
A:Yes, management expects to target share gains in 2026, focusing on share that was previously lost due to service level challenges. Progress is being made in improving service levels, and the company plans to address this on a different cost base in 2026.
Q:What is the impact of pricing pushback from large customers, and how does it affect 2026 pricing actions?
A:Pricing pushback is attributed to large customers and remains a challenge. Management expects a $50 million price/cost headwind for 2025 and is taking actions to address cost structure and efficiency. The environment remains dynamic, and no specific guidance for 2026 pricing actions was provided.
Q:How did sales trend through Q3 and into October, and what is necessary to improve mix dynamics?
A:Sales trends did not show significant improvement in October despite interest rate relief. Consumers remain cautious, especially on big-ticket items. Mix dynamics are not expected to change significantly in the near term, with volume being the primary driver of revenue changes.
Q:What is the breakdown of the lowered revenue guidance for core, and how much is due to volume versus mix?
A:The lowered revenue guidance is primarily driven by volume, with more than 90% attributed to volume declines. Mix changes are minimal and not a significant factor in the revised guidance.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the potential business sale's impact on deleveraging and liquidity, as well as on 2026 pricing actions. They also used vague language when discussing the $55 million in Q4 productivity savings and the 39% reduction in EBITDA expectations, leaving some questions unanswered or unclear.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Product mix
Slide market
Tier
asset
balance sheet
base reduction
benefit cost
challenge ability
construction repair
cost action
cost base
cost headwind
court order
decision
demand challenge
demand price
demand term
deterioration
end market
exposure
leverage balance
liquidity position
market demand
market factor
market inflation
market share
material
moment
order divestiture
pressure market
pricing
recovery
remodel activity
repair remodel
review outcome
saving
service
share loss
update
JELD Transcript
JELD-WEN Holding, Inc. (JELD) Q3 2025 Earnings Call Transcript
Unknown11-4
The earnings call reveals significant challenges: declining volumes, aggressive competitor pricing, and reduced EBITDA expectations. Although there are transformation initiatives and cost-saving measures, the market conditions remain weak, and guidance indicates ongoing struggles. The potential business sale is uncertain, and management's vague responses further amplify concerns. Given the market cap of $1.12 billion, the stock is likely to experience a negative reaction, falling between -2% to -8% over the next two weeks.
JELD-WEN Holding, Inc. (JELD) Q2 2025 Earnings Call Transcript
Unknown8-6
The earnings call reveals a challenging financial situation with declining revenues, high leverage, and negligible free cash flow. Despite plans for improvement, the immediate outlook remains weak. The Q&A section highlights concerns about financial leverage and lack of clarity on strategic actions. The company's market cap suggests moderate stock price sensitivity, but the overall sentiment is negative due to financial underperformance and uncertainties.
JELD-WEN Holding, Inc. (JELD) Q1 2025 Earnings Call Transcript
Unknown5-6
The earnings call reveals significant financial challenges, including a 19% revenue decline, increased net debt leverage, and negative cash flow. Despite cost reduction efforts, the guidance indicates further revenue declines and weak EBITDA improvements. The Q&A highlighted management's uncertainty in passing tariff costs to customers and muted seasonal growth expectations. The absence of a share repurchase program and unclear responses to key risks further dampen sentiment. Considering the small-cap market cap, these factors suggest a negative stock price movement of -2% to -8% over the next two weeks.
JELD-WEN Holding, Inc. (NYSE:JELD) Q4 2024 Earnings Call Transcript
Unknown2-19
The earnings call indicates a challenging financial landscape with declining revenues and EBITDA, increased debt leverage, and downward-revised guidance for 2024. Despite cost-saving initiatives and transformation projects, the weak financial performance and cautious outlook, especially in key markets like North America, suggest a negative sentiment. The Q&A highlights management's uncertainty in addressing cost challenges and inflation, further supporting a negative outlook. Given the small-cap status, the stock is likely to react more strongly to these negative factors, resulting in a predicted stock price movement of -2% to -8% over the next two weeks.
JELD Report
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